What is BRICS and Can I Eat It?

It’s hard work staying updated on generational texting. Some days, I am reduced to a simple LOL or TL. Which for me, means, I saw it and have zilch time to engage. Seriously, acronyms are out of control. Every industry and country hogs their own and every generation is gleefully creating new ones to confuse phone-stalking parents and/or older siblings.  CEO, AML, IRA, AMEX, IDK. I miss real, spelled-out words and complete sentences. They let you read between the lines and make general assumptions. Of course, simply stating this ages me with dinosaurs.

Take BRICS, for example.  I vaguely remember when they were heavy objects tossed at glass houses and the Berlin Wall.  Those bricks are obviously vintage now. So, what is This, and if I can’t throw it anymore, can I eat it like a brick of chocolate? Inquiring minds want to know.

“BRICs”, as a financial term, stands for Brazil, Russia, India, and China. Right, so now it makes sense! Sort-of, as there are additional countries playing in the game. In the foggy world of political economics, it’s the hot-topic acronym used to represent four major emerging economies currently wielding significant global clout. These particular nations are characterized by rapid economic growth, large populations, and expanding political power. The BRIC grouping is used in discussions of international economics and geopolitics to highlight the increasing importance these countries have in jerking the chains of global financial markets. The original team of four evolved into BRIC”S” when China invited South Africa to join the party in 2010. Missing from this alphabet soup party was and is, the USA.

So, how did this powerhouse alliance actually reach acronym status?  In the UK, a British economist named Jim O’Neill started stirring the pot back in the ‘80s.  He started his career at the Bank of America in 1982, popped over to Marine Midland Bank in 1985  then sidled over to Swiss Bank Corporation in 1988. He made his real debut at Goldman Sachs hanging out with other financial nerds like Henry Paulson and Lloyd Blankfein.

A few collaborative drinks later and the famous 2001 research paper for Goldman Sachs introduced the world to the BRIC concept, identifying Brazil, Russia, India, and China as emerging economic powerhouses.

After mulling it all over, in 2006, the financial crowd hooked into the idea and organized a high-profile summit in Russia where they could drink some more and talk about it. (Yes, Russia). The party invite included top political leaders, diplomats, and financial executives; Lloyd Blankfein from Goldman Sachs, Bob Diamond from Barclays, and Jamie Dimon from JPMorgan Chase. This event also marked the beginning of closer diplomatic and economic relationships between the initial four nations. The shenanigans were just beginning.

In 2011, South Africa received a gilded invitation to join the exclusive club, adding a unique dimension. South Africa was seen as the gateway into the African continent. It would bring vast natural resources and other untapped economic potential making it a valuable addition to the group. Since then, these countries have been busy working together on various global issues including challenging the status quo of Western dominance in the worlds of finance and geopolitics. They were stirring the pot with a very big spoon.

It’s a classic “follow the money” playbook with sharp digs at the banking industry.  Unlike politicians, the financial crowd is quite good at long-term plotting, planning and it seems, collaborating.

In an early challenge to future texting gurus,  O’Neil set the financial acronym balls rolling with “N-11”  naming: Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, South Korea, Turkey, and Vietnam. To obfuscate doddering politicians, he added a sub-category, “MINT”, for Mexico, Indonesia, Nigeria, and Turkey.

Not to be outdone, several South Americans entered the global financial game with their own alliances. The “South American BRICs.” This informal term highlighted the economic and political significance of four key countries in South America: Brazil, Argentina, Chile, and Mexico. Similar to the BRICS nations, these four countries are also recognized for their substantial economic potential, regional influence, and, natural resources. A pattern is emerging.

This gets all very boring until we flashback to 2006.  This is when BRICs began to subtly challenge the global US “In God We Trust” dollar currency. Until recently, one of the initial steps BRICS took to diversify away from the dollar included promoting the use of other currencies. At the time, this did not significantly undermine the dollar’s status as the primary and controlling global currency. Like Russia grabbing Crimea in 2014, this was a testing of the waters. More was yet to come.

BRICS countries then proceeded to initiate several other interesting financial coups. One key twist involved currency swap agreements amongst BRICS nations, which started in the mid-2010s. These agreements aimed to facilitate trade and investment within their own currencies, diminishing reliance on the U.S. dollar for global transactions. Additionally, in 2014 they established the “NDB” (New Development Bank).  It offers alternative funding sources further reducing dependence on financial institutions like the “WB” (World Bank)  and the “IMF” (International Money Fund). The game was on. Additionally, in 2008 joining the expanding financial conspiracy, the concept of crypto started bubbling up. As mere bank-bound mortals, we failed to recognize that our world was about to be rocked. And, cracked.

Another very significant aspect of the BRICS strategy involves advocating for a “multi-polar” world and economic system. Simply put, this means more countries would get to play on par with the big boys. Again, another very direct hit at destabilizing the monopolizing power of the US dollar. Basically, it’s a bid for freedom in international trade relationships. LOL?

Wall Street claims it would take years to upend the US’s financial grip on the world, but they may be shaking in their polished boots behind the closed mahogany doors. Recent membership invites at the August 2023 South Africa BRICS conference were sent to; Saudi Arabia, Iran, the UAE, Egypt, Ethiopia, and Argentina. This shows a growing tendency for breaking free from a US-controlled financial world while creating new financial systems including cryptocurrencies.

Leaders within the BRICS nations are calling for reducing reliance on the U.S. dollar and are already proposing alternative reserve currencies. BRICS nations also actively promote the use of their own currencies within the membership alliance.

In an interesting political challenge, the Chinese yuan (Renminbi) was a potential favourite for international trade and finance. OMG?

Not so sure about that one in the long run considering the current state of financial markets in China. Then again, this is a time of massive and fast change. If we can’t pivot on the proverbial dime anymore, we will need something else, ASAP! Bitcoin?

This might explain why American politicians have been discreetly high-tailing it to China for “trade talks”.  It’s the start of a global financial coup and yes, the US and Wall Street are worried.  Losing its grip on the reserve currency in a multi-polar world would effectively castrate America’s power on multiple levels.

In the arena of global finance, digital currencies continue to emerge as yet another formidable challenge to the U.S. reserve currency and the power of traditional banks. These digital disruptors are reshaping global finance by offering independent, often un-trackable, international payment systems. Bitcoin and other digital currencies are rapidly gaining popularity as businesses and individuals lose confidence and trust in banks for managing financial transactions. This again poses unique challenges to both the US dollar status and, governmental tax systems.  We may be witnessing a not-so-subtle revolution taking corrupt banking practices and over-spending politicians to task.

With borderless freedoms, digital currencies like Bitcoin could usher in a new era of cost-efficient cross-border trade and remittances. A crushing blow to fee-encumbered traditional banking. We would control our money directly, without an intermediary. Equally, these new technological advances are pushing the BRICS nations to re-evaluate their own 1980’s financial strategy plan.

Many cryptocurrencies are designed to serve specific purposes or, are associated with particular blockchain platforms forever busy “mining”.  Others are being created as experiments for niche applications. It’s a virtual version of the California gold rush. Bitcoin and a few other cryptocurrencies like Ethereum, Ripple, and Litecoin are the most well-known and widely used but, there are many more.  The cryptocurrency market is innovative and highly dynamic. New cryptocurrencies combined with NFTs can be created very easily by private individuals. OMG indeed.

As the BRIC’s nations deliberate on their own alternative payment systems, digital currencies are the un-invited wildcats shredding the vintage financial furniture. And, the potential iceberg that could sink an arrogant Wall Street Titanic.  In a rapidly shifting landscape of international finance meshed with AI, traditional banking concepts are becoming as outdated as Franklin D. Roosevelt’s face flattened on a dime.

Forever central to the dilemma of American politics is the integral, nasty role oil plays in sustaining its economic leadership. Our daily living still depends on it, but we feel abused and in need of a Financial Abuse Shelter for escape.  The United States is one of the world’s largest oil producers and yes, consumers. It continues to rely heavily on its oil industry to maintain both economic momentum and geopolitical influence. Additionally,  the intricate web of financial ties and strategic partnerships spilling through oil allows the US to wield significant leverage over global energy markets and fortify its economic power. Our military is well-oiled for a reason.

Many US politicians get paid by lucrative industries to safeguard their economic interests and are, for obvious reasons, hesitant to enact new policies that would disrupt the status quo or bank balances.

This complex web of dark money, economic dependencies, and generational political corruption ties into the heavy resistance to the prospect of any new money system.  Ignoring it will create unique challenges for a country facing elections in the midst of a climate crisis. It’s going to get messy.